Markets Continue Slide, Fed Says Nothing New, Earnings Good (April 22 Market Recap)
Dow 33,811 (640) or (1.9%)
Nasdaq 12,839 (512) or (3.8%)
S&P 4,271 (121) or (2.8%)
USD10Y 2.906% +7.8 bp or +2.8%
Inflation Numbers Dominate Earnings
The week was trending in a positive direction through Wednesday. On Thursday, Fed Chair Jerome Powell stated that a 50bp rate hike was on the table for the May 3-4 meeting which nearly every market prognosticator had already factored into their thesis. Apparently, the market had not done so. Over Thursday and Friday, the markets fell precipitously as institutions continued to reduce their risk exposure.
Economic Data and Earnings
Fed Chair Powell’s speech overshadowed a very good week in economic data and earnings. WTI Crude traded down 5% on the week, IBM (IBM), Bank of America (BAC), Proctor and Gamble (PG), AT&T (T), American Airlines (AAL), and American Express (AXP) all announced good to great quarters and United Airlines guided to a profitable 2022. The two biggest stories were Netflix (NFLX) which announced its first subscriber loss in over a decade and traded down over 35% on the week and Tesla (TSLA), which despite component and semiconductor shortages and a Covid related shutdown of their Shanghai facility, crushed their quarterly numbers and delivered a record number of vehicles.
Defense Secretary Austin and Secretary of State Blinken will visit Kyiv this week. President Biden announced another $800 million in weapons deliveries to Ukraine, including much sought after 155mm howitzers, 144,000 rounds of artillery and tactical drones. Mariupol has finally been overrun by the Russians with only a steel plant remaining in Ukrainian hands. Ukrainian leadership reported that they had destroyed a Russian command post in the city of Kherson. Unconfirmed reports from the Ukraine claim that 50 senior members of the Russian command were near the attack and that two Russian generals were killed.
Infections continue to rise in the Northeast and Midwest and hospitalizations, while few, have flattened and are also starting to increase. The most lagging of all the indicators, deaths, are still decreasing.
It is a week chock full of important earnings; Facebook, Google, Microsoft, Amazon, and Visa to name a few.
Market Data Points Next Week
- Monday – Earnings: Coca-Cola (KO), Activision-Blizzard (ATVI).
- Tuesday – March Durable Goods, April Consumer Confidence, March New Home Sales. Earnings: Microsoft (MSFT), Alphabet (GOOG), Visa (V), Pepsi (PEP), UPS (UPS), Chipotle (CMG), General Motors (GM).
- Wednesday – March Pending Home Sales. Earnings: Meta (FB), Qualcomm (QCOM), PayPal (PYPL), Boeing (BA).
- Thursday – Initial Jobless Claims. Q1 Real GDP (first estimate). Earnings: Apple (APPL), Amazon (AMZN), Mastercard (MA), Intel (INTC), McDonalds (MCD), Caterpillar (CAT).
- Friday – Core PCE, Chicago PMI. Earnings: Exxon (XOM), Chevron (CVX).
April 22 Market Recap Trading…
Monday – Dow (39) to 34,411, Nasdaq (18) to 13,332, S&P (1) to 4,391, USD10Y +3.4bp to 2.862%
- Five of the eleven S&P sectors traded up today led by Energy, Financials, and Consumer Discretionary.
- WTI Crude traded up $1.26 to settle at $108.21.
- Earnings: Charles Schwab (SCHW) missed numbers and traded down 9.4%. Bank of America beat numbers and traded up 3.4%.
Tuesday – Dow +499 to 34,911 Nasdaq +287 to 13,371, S&P (15) to 4,397, USD10Y (5.5bp) to 2.807%
- A relief rally grabbed the markets today as tech and growth names that had been battered rallied despite the yield on the 10-year U.S. Treasury rising as well.
- Ten of the eleven S&P sectors traded higher led by Consumer Discretionary, Real Estate, and Communication Services.
- WTI Crude fell over 5% to close at $102.40/bbl despite an unexpected draw of 4.5mn barrels from U.S. crude inventories.
- March Housing Starts and Building Permits beat expectations.
- Earnings: Johnson and Johnson (JNJ) reported mixed results but traded up 3.05%. IBM (IBM) beat revenues, and earnings and gave positive guidance based on strength in their cloud business. IBM traded up 2.36%. Netflix (NFLX) reported a loss of 200,000 subscribers, their first subscriber loss in a decade and the stock is down 25% or $89 in after-hours trading.
Wednesday – Dow +249 to 35,160, Nasdaq (166) to 13,453, S&P (3) to 4,459, USD10Y +3.3bp to 2.84%.
- The story of the day was earnings and especially the spectacular fall of Netflix after last night’s earnings call. The streaming giant fell 35% or $122/share as traders rushed for the exits. The Netflix numbers dragged down the entire Nasdaq. Meanwhile Proctor and Gamble (PG) beat earnings and traded up 2.7% and IBM traded up 7.1% after their earnings call last night. Those two names helped rally the Dow. After the close, Tesla (TSLA) reported record deliveries, blew out their numbers and traded up 5.57% in the late session. United Airlines (UAL) lost more than expected on fewer revenues than expected but traded up 5.6% post close after telling the Street it would be profitable in 2022.
- Eight of eleven S&P sectors traded higher today led by Real Estate, Consumer Staples, and Health Care.
- The May Crude oil (WTI) contract, which ceased trading today, closed relatively unchanged at $102.75/bbl.
- March Existing Home Sales beat expectations but something to keep an eye on with rising mortgage rates, sales were down month over month (5.77mn vs 5.95mn February).
Thursday – Dow (368) to 34,792, Nasdaq (278) to 13,174, S&P (65) to 4,393, USD10Y +7.7bp to 2.917%.
- The market reacted extremely negatively to news that was not new; namely that Fed Chair Powell is open to a 50bp hike in May in order to tame inflation which he termed “absolutely essential.”
- All eleven S&P sectors traded down today led lower by Energy, Communication Services, and Technology.
- Jobless claims came in at 184,000 claims vs estimates of 185,000 and last week’s slightly revised higher 186,000 reports (originally reported as 185,000 claims). Continuing claims decreased to 1.42 million people.
- June WTI Crude remained relatively unchanged at 103.83/bbl.
- Earnings: Snap (SNAP) rose 6% on strong subscriber numbers. Gap (GPS) fell 10% after guiding 2022 lower and announcing the departure of Old Navy’s CEO, Nancy Green. AT&T rose 4% after beating their numbers. American Airlines (AAL) jumped 3.8% on a profitable fiscal Q2.
Friday – Dow (981) to 33,811, Nasdaq (335) to 12,839, S&P (121) to 4,271, USD10Y (1.1bp) to 2.906%.
- The market sell off in response to Fed Chair Powell’s comments yesterday continued today.
- All eleven S&P sectors traded down today led lower by Materials, Health, and Communication Services.
- June WTI Crude fell almost 2% to 101.75/bbl.
- April Markit Manufacturing beat expectations while Services missed.
- Earnings: American Express (AXP) beat their numbers and yet traded down 2.8%. After trading up post-close yesterday, Snap (SNAP) traded down on other metrics that were missed. HCA Healthcare (HCA) missed and guided down and fell 21.82%. Verizon (VZ) reported in-line numbers and lost fewer subscribers than expected and still traded down 3.19%.
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